Of all the elements of new education, professional and ethical standards for financial advisers, the one that casts the longest shadow by far is the requirement for all existing advisers to have a bachelor or higher degree, or equivalent, by 2024.
But a significant amount of uncertainty and angst has been removed with proposed guidance issued yesterday by the Financial Adviser Standards and Ethics Authority (FASEA), which sets out how advisers can meet the new requirements by completing a postgraduate diploma, at Australian Qualifications Framework (AQF) level 8, which for some may take up to two years of part-time study. A bachelor degree typically takes three years of full time or six years of part-time study.
The AQF level 8 option – which typically leads to a postgraduate diploma qualification – will short-circuit the anxiety and education process for advisers for whom completing a bachelor’s degree is not an option. To be approved by FASEA an AQF level 8 course must offer at least eight units that cover ethics, professional attitudes and behaviours, financial planning and advice process, and technical requirements.
FASEA chief executive officer Deen Sanders says issuing guidance now is a deliberate move to clear the obstacle that the degree-or-equivalent education standard may have become to allowing advisers to think about professional standards more broadly. While education standards are front-of-mind for existing advisers, they are only part of broader professional standards reform.
“The introduction of things like codes of ethics or CPD policies and other professional standards are all going to be difficult in their own right. The code of ethics in particular will be an implementation challenge,” Sanders says.
“But what’s apparent to us is that those particular standards, as significant and ambitious as they may be, aren’t really able to be heard properly while the adviser community is deeply anxious about their own education requirements, and what they need to do, even though that has the longest practical timeline- with compliance not due until 2024.
“It blocks them from being able to participate positively, I think, in the rest of the conversation.”
The AQF level 8 pathway presents a genuine alternative for advisers whose qualifications would prevent them from attaining a degree or degree-equivalent qualification by 2024.
“What we hope the advice community embraces is that, really, two years of part-time study that raises the education level of the whole sector, elevates in an objective and observable way to the public that the advice community is qualified and capable – and that frankly may also add some value to their own professional life – could be seen as an opportunity for the advice community, rather than something they should be anxious about or try to avoid for the next six years,” Sanders says.
Advisers with no relevant qualifications but with sufficient experience may be able to take the AQF level 8 pathway by completing a postgraduate certificate program first, which typically takes one year of part-time study and has four units of study.
“That pathway is what’s known as a ‘nested qualification’, in the language of education,” Sanders says. “If you finish the graduate certificate it demonstrates your capability to go on to the postgraduate diploma and those credits will typically be able to go towards your postgraduate diploma.”
Sanders says the exact entry criteria for the postgraduate courses is still a matter for individual institutions, but “people with five or more years’ experience will typically be allowed to enter into a postgraduate certificate as a simple stepping stone to their postgraduate diploma, even if they don’t have a degree”.
“Experience is often valued by the education provider, because they recognise it means you have demonstrated a commitment to work and professional diligence, and those are useful tools for study,” Sanders says.
“I want to be clear: this doesn’t mean that people have to do bachelor’s degree and then take on an additional postgraduate qualification to meet the requirement. This is about recognising that people with experience, rounded experience, and maybe even educational qualifications and programs under their belt, should be valued and recognised. That’s why an AQF level 8 program, of eight units, is a legitimate pathway for those individuals.”
Sanders says FASEA wants to allow as long as possible for consultation on this, which will open in the new year, with consultation tools being loaded onto the standards authority’s website, and will close on June 29, 2018.
“Rather than wait until next year to release this, the standards authority is firmly of the view that early information will be good for the adviser community to think about how their plans will roll forward, but also, to be honest, to encourage the marketplace and solution providers to think about how they can support advisers over the next six years,” Sanders says.
“We’re encouraging people to think about it and to consider the way it affects them and make good decisions about their options for compliance with the education and training standards.
“We’ve also prepared an adviser pathway decision tree to help people determine where they are.”
In an explanatory paper on the proposed guidance FASEA says it will consult on “the practical application of the propped guidance and how the adviser community might be supported in adoption of the requirement”.